The members' book: an essential document of an association
In order to establish a corporation (Spa, Srl, Sas...) or a simple association, it is essential to create a file containing a number of compulsory social documents and the keeping of accounting records. Among the compulsory books, a company must present the Book of Minutes of the Board of Directors and Minutes of the Shareholders' Meeting and the Register of Members. In addition, depending on what is specified in the articles of association of the association, other books, such as that of the Board of Auditors, may be established. Our article today focuses on the third of these mandatory social documents: the members' book.
What is a members' book? How is it drawn up? What information must be mentioned? What are the differences with the book of volunteers?
You will find the answer to these questions in our article.
The register of members: definition
Drawing up the members' book is one of the formalities for setting up an association. It is used to detail the amount of contributions, in cash or other form, subscribed and paid by each member and the number of shares received in return. This list thus makes it possible to identify all the partners of the association.
It is imperative that the information provided in the members' book be certified as conforming to the reality of the various subscriptions made by the society's members and associates.
The total amount of contributions must be remitted to the bank; this amount is called the capital deposit with the bank. The depositary of the funds must disclose and make available to each shareholder the shareholders' book.
N.B. Even if the company has only one shareholder, the shareholders' book is still a mandatory document to be provided. The only difference from a corporation with several shareholders is that the register of shareholders will be a single-named list.
The shareholders' register: structure
Let us state specifically what Article 2421 of the Civil Code states for the shareholders' register.
The company must keep:
"The shareholders' register, in which the number of shares, the surnames and forenames of the holders of registered shares, transfers and encumbrances relating thereto, and payments made must be indicated separately for each class.
Thus, the main information that the register of shareholders must contain is as follows:
- Nature of the document ('shareholders' book');
- Company name, company form (Spa, Srl, Sas), address of registered office
- Amount of the association's share capital (the minimum share capital for associations is only one euro) ;
- Nominal value of the association's shares ;
- Amount of the paid-up share capital of the company ;
- Number of shares subscribed by each shareholder of the association ;
- Name, surname, address of each shareholder (natural person) or legal form, name of the company, amount of the share capital, city and registration number of the company
- Amount of cash contributions paid by each shareholder (or valuation of their contributions paid in another form);
- Summary of the total number of shares subscribed in the share capital, the total amount of contributions and the total amount of payments made;
- Date, place of creation and number of copies of the association's register of members.
In addition, it would be advisable to have a separate document proving that the annual membership fee has been paid, showing the date of payment of the fee for each year.
Once compiled according to these rules, the membership book must be certified by the founding partners of the association.
The shareholders' book: how to fill it in
Who fills out the register of members?
There are three ways to draw up the register of members for an association or corporation:
- Option 1: the person who draws up the articles of association is in charge of drawing up the association's register of members. The register of members is often found attached to the articles of association.
- 2nd possibility: the person who writes the articles of association draws up the list of share subscribers and incorporates it directly into the articles of association, in the article 'share capital'. However, in practice, many registers require that the list of subscribers be provided in a separate document.
- 3rd possibility: the list of share subscribers is drawn up by the bank, as an appendix to the certificate of deposit of funds (remittance after deposit of the share capital with the bank).
Small tip: even if you can opt for a variable capital SAS, this does not exempt you from drawing up a shareholders' register that includes the founding members.
The parameters to be respected when drawing up the shareholders' book
As we have repeated several times, the shareholders' register is a mandatory document that every company must have. As far as its drafting is concerned, both paper and digitised formats are accepted. In fact, it is very important to emphasise that this document must be kept at the registered office of the entity and kept available at all times for those who wish to consult it.
In fact, the list of members indicates the natural persons who can benefit from specific rights and duties in accordance with the membership fee.
Normally, endorsement of the membership book is not required. However, it is an additional procedure to be considered if one seeks to have a guarantee that the book is referable to the organisation, and that the data is unchangeable, definitive by the simple fact of being collected in a previously validated medium.
The members' book: how to become a member?
To become a member of an association, the procedure is simpler than you might expect.
Three basic steps must be followed to become a full member of an association:
- The member must fill out an application for admission. Usually, this application can be requested directly from the association or you can find preforms online.
- The board is in charge of evaluating the potential member's application and can decide whether to accept or reject it.
- Once the board's decision has been taken, the applicant becomes a new member of the association in all respects. He must then provide his personal data (Name, Surname, Qualification, Date of Birth, Residence, Date of Admission, Regularity in payment of dues, etc.) to be registered in the membership book.
It is the association's task to keep the membership book up-to-date, real and with accurate dates in the association.
The administrative process described is common to all associations. However, we recommend that you check the statutes of the association of which you wish to become a member. In fact, some associations may have a special acceptance/rejection process for the applicant and the rights/duties of the member may also vary from company to company.
The register of members: what is its importance?
The shareholders' register is one of the most important mandatory corporate documents. In fact, it performs a dual function:
- the register of members plays an important role in managing the democratic nature of association life
- the register of members is important to prove the existence of the association's life
- to third parties (Ag. Entrate, Guardia di Finanza, SIAE, etc.)
- for the internal regulation of powers. In fact, the members' book serves to check who is really a member and who is not. For example, associations organise parties for members only and in the event of an inspection they must be able to show the inspectors that the persons present at the party are actually members.
Differences between the register of members and the register of volunteers
The register of members and the register of volunteers are two distinct social documents with different purposes.
The register of members is an official proof of membership of a company or association and provides each member with a set of rights and duties related to the associative life of the entity. In addition, the register of members is essential for calculating quorums at meetings and for identifying who enjoys the rights of members.
The volunteers' book or register of volunteers, on the other hand, is the equivalent of the members' book but for a non-profit organisation.
The book of volunteers is mainly drawn up for insurance purposes to identify the organisation's list of permanent and non-occasional volunteers. The register, in fact, will be the proof for the insurance company that the person in question is paid by the association. In this way, each member will thus have an insurance policy within the scope of the work carried out for the non-profit organisation.
Does the members' book have to be stamped?
For some categories of associations, the members' book is not subject to authentication. This means that it does not have to be authenticated by a public official (notary, municipal secretary).
The associations that fall under this exception are the following:
- Sports Associations,
- Cultural Associations or Associations for Social Promotion, and
- Third Sector Bodies
The register of members may therefore be in the form of 'loose' sheets signed by the President of the General Meeting or the Board of Directors and the Secretary.
And in the absence of a members' book?
According to CTP of Pisa ruling no. 8/2011,
"formal membership of the association and the apparent regularity of its statutes is not in itself sufficient for admission to the favourable tax regime."
For this reason, companies must have a register of members to show that the associative life respects democratic principles and, above all, that the association is not temporary for the sole purpose of occasionally benefiting from the tax relief services mentioned in the aforementioned judgment.
If the Revenue Agency carries out an assessment and verifies that there is a lack of associational life, the penalties for the company are as follows
- the revenue agency disallows any income under institutional revenue
- the association is again subject to normal taxation
You now have all the information in the register of members. So, if you have founded an association and have not kept a membership register, now is the time to do so in order to benefit from the dues provided by the state.
If, on the other hand, you want to become an associate of an organisation, you now know the procedure to follow.
If you have any questions or doubts on the subject, please do not hesitate to write them in the comments.
Article translated from Italian